The agreed sale price of HMEED is Rs 337.5 crore inclusive of net current assets which will include both the manufacturing facilities of HMEED and its engineering and education centres, according to a company statement.

Kotak Mahindra Capital Company and DSP Merrill Lynch advised HML and Caterpillar Inc respectively for the transaction.

Caterpiller - the manufacturer of construction and mining equipments, diesel and natural gas engines and industrial gas turbines - plans to make off-highway trucks, wheel loaders and track type tractors in HM's Thiruvallur plant in Chennai.

The company will also manufacture wheel loaders and back hoe loaders at HM's Pondicherry plant, it said adding that the existing marketing arrangements of Earth Moving Equipment Division will continue.

HM will continue to be joint venture partner with Caterpillar in Hindustan Power Plus Ltd, which manufactures diesel engines and generator sets.

In a joint statement, HM executive director A Sankara Narayanan and Caterpillar India chairman & managing director EH Kohutek said: "HM and Caterpillar have been partners in many ways. This agreement will offer a wider product range to the Indian market. Caterpillar's technology leadership combined with HM's established plants and market base will make this agreement mutually beneficial."

Set up in 1969, HMEED has two facilities in Chennai and Pondicherry. It manufacturers dumpers, loaders and track type tractors of their own design and under license from Caterpillar since 1984. The total turnover of the company is about Rs 355 crore.